REFILE-UPDATE 1-Encouarging trade talks boost European shares

(Refiles for dropped letter in headline)

* China in close touch with U.S. for Oct trade talks

* Tech stocks bounce on upbeat trade tone

* Imperial Brands slides on profit warning

* STOXX 600 still set for first weekly drop in six

By Shreyashi Sanyal and Sruthi Shankar

Sept 26 (Reuters) - European shares moved higher on Thursday, with technology shares leading the charge after encouraging comments from China on trade with the United States soothed sentiment that was rattled by growth worries and political turmoil.

The Chinese commerce ministry said Beijing is in close communication with Washington and is preparing to make progress at trade talks in October.

Although investors are keeping a close watch and doubt a deal could be struck between the two sides in the near future, they are hopeful of any signs of progress in the negotiations.

"There will be a deal towards the second quarter of the upcoming year," said ING economist Timme Spakman, while adding that the U.S. needs to take a step back and give China some breathing space to make room for a deal.

Trade-sensitive tech stocks jumped 1.1%, helping the pan-European STOXX 600 index rise 0.5%.

Euro zone's blue-chip index climbed 0.5%, boosted by shares of semiconductor maker ASML Holdings , while export-reliant Germany gained 0.4%.

The comments on U.S.-China trade also helped spark a reversal in early losses after Bloomberg reported the World Trade Organization will authorize the U.S. to impose tariffs on nearly $8 billion of European goods due to illegal state aid provided to aircraft maker Airbus SE.

European equity markets closed at two-week lows on Wednesday on fears about an impeachment inquiry into U.S. President Donald Trump and no clear view on progress in U.S.-China trade negotiations.

Investor confidence has also been shaken by weak readings on economic data and recent profit warnings from big European companies, which have fueled renewed fears of a corporate blood bath for the upcoming earnings season.

The latest warning came from Imperial Brands Plc, which tumbled 10.2%, after it said its expects full-year profit to be flat compared to last year in the face of a regulatory backlash against vaping in the United States.

Shares of peer British American Tobacco Plc also fell 2.2%.

The personal & household goods index rose 0.1%, logging the smallest gain among major European sub-sectors.

Pearson slid 16.7%, to the bottom of the STOXX 600, after the British education company warned its full-year profit would come in at the bottom of its forecast range.

However, Belgian supermarket chain Colruyt jumped 5.2% after the company said it expected full-year net income to rise slightly. (Reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Bernard Orr)